Patients are swallowing more of the cost of pills

Employers and insurers shift rising prices to users

February 24, 2004|By Cyril T. Zaneski | Cyril T. Zaneski,SUN STAFF

If you have a prescription drug benefit, prepare for sticker shock.

Pharmacy co-payments that had hovered for years at $5 or $10 a script are soaring now to $50 or more for brand-name medications, as insurers and employers shift more of the growing cost of health care to consumers who had grown accustomed to believing that only uninsured seniors worried about paying for drugs.

"People are confused," said Pat Burke, who owns pharmacies in Hampden, Reisterstown and Parkville. "Most of the time, it's the pharmacist who has to break the news that the medication they used to get for $8 is now $12 or $40 -- or that the insurer won't cover it at all."

FOR THE RECORD - An article in yesterday's editions about rising co-payments for prescription drugs incorrectly identified the dean of the University of Maryland School of Pharmacy. He is David A. Knapp.

Spending on prescription drugs -- the fastest-growing component of the nation's medical tab -- has been expanding at about twice the inflation rate in the past decade. Now, employers and insurers are rethinking the generous drug benefits that have helped fuel that growth.

"The number of prescriptions has just blown through the roof," said Donald Knapp, dean of the University of Maryland School of Pharmacy. "And the availability of insurance is a factor. Ten years ago, 35 percent of working adults had a drug insurance benefit. Now, 85 to 90 percent have it."

Built on a 1980s model pioneered by health maintenance organizations, drug benefits allowed employees to plunk down a low co-payment for any prescription. It worked for all because drug therapies helped keep people healthier and thus kept down hospitalization costs.

More prescriptions

But "a tremendous onslaught of new, very expensive medications" came on the market in the 1990s, and physicians began writing scripts liberally, said Stanley Wallack, director of Brandeis University's Schneider Institute for Health Policy.

Almost overnight, the benefit became a sweetheart deal for employees who could pay $5 for a $150 bottle of pills and leave insurers and employers to pay the rest.

Americans spent $184 billion on prescription drugs last year, an increase of 13.4 percent over the year before, the federal government reported this month. They filled 3.1 billion prescriptions in 2002, a billion more than in 1992.

"Now, the insurers are pushing back," Wallack said.

CareFirst BlueCross BlueShield, for example, introduced plans this year that allow employers to offer three "tiers" of co-payment options for their employees.

The lowest possible co-payment option under those plans is $5 for generic medications in the first tier, $20 for "preferred" brand-name drugs in the second and $30 to more than $50 for the most expensive medicines.

"We want people to understand: Drugs cost a lot," said Amy Doherty, CareFirst's product manager. "That's hard to do if they pay a flat $5 or $10 or $15 every time."

So a CareFirst member pays $40 or $50 for a month's supply of the "nonpreferred" cholesterol-lowering drug Zocor, whose retail cost is about $3.15 a day, and $5 or $10 for that amount of the generic lovastatin, which costs less than $1 a day.

The plan also enlists physicians by requiring them to call the insurer's drug benefit manager for permission to write prescriptions for nonpreferred drugs.

CareFirst is riding an industrywide wave: 63 percent of workers with employer-sponsored drug benefits will have "tiered" co-payment plans this year, up from 27 percent in 2000, with an average co-payment of $29 for the most expensive drugs, according to Kaiser Family Foundation, which monitors health care trends.

Some plans are going beyond the tiers to limit coverage to generics or requiring beneficiaries to pay percentages of the total cost of drugs.

"The transfer of liability of drug costs [to beneficiaries] that began around 2000 is just rocketing," said Bruce Stuart, the director of UM's Peter Lamy Center on Drug Therapy and Aging.

Tracking the impact of a tiered benefit on hypertension prescriptions, UM researchers Sachin Kamal-Bahl and Becky Briesacher found that insurers and employers reduced their spending 52 percent as patients switched to generics or simply stopped filling all their prescriptions.

Six-fold increase

Meanwhile, patients' out-of-pocket spending for hypertension medicine increased 600 percent, according to the national study of 1999 health insurance databases from 45 large employers and public organizations published this month by the journal Health Affairs.

That cost-shifting is just starting to be noticed by drug customers.

"My co-payments have almost doubled," said Kate Cameron, a mother of a 2-year-old. The Glyndon resident pays $14 for her prenatal vitamins and another $14 for vitamin supplements for her daughter. "It's a large increase, but it's not enough that we have to worry."

Faith Wade, office manager for a small Baltimore construction company, has a front-row seat on the struggle to contain drug costs. Employees on her company's plan face $30 co-pay charges for top-tier drugs.

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